MOODY'S AFFIRMS RATINGS OF GREAT AMERICAN FINANCIAL RESOURCES (Baa3 SENIOR DEBT) AND AFFILIATES FOLLOWING REFINANCING OF SHORT TERM BORROWINGS; RATINGS OUTLOOK CHANGED TO STABLE FROM NEGATIVE
Moody's Investors Service affirmed the existing debt ratings of Great American Financial Resources, Inc., GAFRI, (Baa3 senior debt) and the A3 insurance financial strength rating of Great American Life Insurance Company (GALIC) following the announcement that the company had successfully refinanced its short term bank borrowings. Concurrently, the rating agency also changed the outlook to stable from negative. The company’s negative outlook was primarily related to concerns about GAFRI's liquidity profile; specifically, the company had been relying on short-term bank facility financing to fund long term capital needs. These rating agency concerns have now been eliminated as the company recently issued approximately $113 million retail debt offering and used the proceeds to pay down its bank facility that was contractually expiring at year-end 2004.
The rating agency also affirmed the Baa3 senior debt ratings of American Financial Group (AFG) and the A3 insurance financial strength ratings for members of the Great American Insurance Group, its property and casualty (P&C) subsidiaries. In the same action, the rating agency changed the outlooks on AFG and rated P&C subsidiaries to stable from negative. Moody’s noted that the successful refinancing of GAFRI's bank debt was a favorable development for AFG's outlook. Moody’s also noted that expectations for AFG to sell its remaining shares in Infinity Property and Casualty Corporation (NASD: IPCC) was a significant factor in its decision to stabilize the company’s outlook. AFG intends to use the proceeds to reduce financial leverage and bolster statutory capital levels, which Moody’s considers to be a positive credit development as the rating agency remains concerned with AFG’s relatively high financial and operational leverage profile, recent earnings volatility and modest cash on cash coverage of holding company outflows. Moody’s noted that expectations for improved P&C earnings as well as lower leverage and higher coverage levels support AFG’s current ratings and stable outlook.
Moody's ratings of GAFRI are based primarily on the company's niche position in the tax-deferred annuity market for public education employees (403(b) market). The rating also takes into account the company's renewed focus on its core operations, as well as GAFRI's relationship with its parent, AFG, which owns 82% of the company.
These strengths are tempered somewhat by GAFRI's moderately high financial leverage and modest cash on cash coverage of its holding company debt. Going forward, Moody's noted that any future upward rating movement would be largely dependent upon a continued improvement and diversification of GALIC's statutory earnings, leading to an increase in capitalization and free cash flow. A change in the credit profile of AFG would also have a material impact on the ratings at GAFRI.
The following ratings associated with Great American Financial Resources, Inc. and its life insurance subsidiaries were affirmed with the outlook changed to stable:
AAG Holding Company, Inc. -- Baa3 senior debt, (P)Baa3 prospective senior unsecured debt, (P)Ba1 prospective subordinated debt;
Great American Financial Resources Inc. -- (P)Ba2 prospective preferred stock;
American Annuity Group Capital Trust I & II -- Ba1 capital securities;
Great American Life Insurance Company -- A3 insurance financial strength.
The following debt ratings associated with AFG and its P&C subsidiaries were affirmed with the outlook changed to stable:
American Financial Group, Inc. -- Baa3 senior unsecured debt Baa3, (P)Baa3 prospective senior unsecured debt and (P)Ba1 prospective subordinated debt;
American Financial Capital Trust I -- Ba1 capital securities;
American Financial Capital Trust II -- (P)Ba1 prospective capital securities;
American Financial Corporation -- Ba2 preferred stock;
Great American Insurance Company -- A3 insurance financial strength;
Great American Fidelity Insurance Company -- A3 insurance financial strength;
Great American Spirit Insurance Company -- A3 insurance financial strength;
Great American Contemporary Insurance Company -- A3 insurance financial strength;
Great American Security Insurance Company -- A3 insurance financial strength;
Great American Protection Insurance Company -- A3 insurance financial strength;
Great American Alliance Insurance Company -- A3 insurance financial strength;
Great American Assurance Company -- A3 insurance financial strength;
Great American E & S Insurance Company -- A3 insurance financial strength;
Great American Insurance Company of New York -- A3 insurance financial strength;
Republic Indemnity Company of America -- A3 insurance financial strength;
Worldwide Casualty Insurance Company -- A3 insurance financial strength;
AFG is an Ohio-based holding company that, through its operating subsidiaries, provides specialty commercial property and casualty insurance, as well as tax-deferred annuities and life insurance products. At September 30, 2003, AFG reported net income of $97.2 million for the first nine months of 2003 and shareholders' equity of $1.8 billion. During the same reporting period, GAFRI reported net income of $35.2 million and shareholders' equity of $980 million (including net unrealized gains). Moody’s Insurance Financial Strength Ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations.
Visit our website at www.moodys.com/insurance.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.